Dismissed Chapter 13 question

[southernmama]

We dismissed our Chapter 13 in December 2019. I immediately contacted the credit union that had our two vehicle loans and large signature loan. It was previously paid in the BK but I wanted to make it as right as I could with them so we made arrangements to continue to make the car payments (which has less than a year on both before paid off) and then we were going to throw the payments we paid for the cars to the signature loan. I find out yesterday that the credit union turned us over to Legal for the signature loan. I don’t know if that means they are going to garnish us or send us letters to set up some kind of payment arrangement. I’m panicking as the lady I needed to speak to never called me back yesterday. My husband was furloughed in March and finally went back to work in June so we are still playing catch up. Anyone have any experience with this?

[justbroke]

Since your Chapter 13 was dismissed (either voluntarily or involuntarily) the creditors can pursue you with all rights and remedies that they have under State non-bankruptcy law (and in your borrowing agreement). If you still bank there, that could become problematic as they may attempt to use any setup rights which "may" exist.

The issue is that if that signature loan is collateralized with the vehicle (likely) then they could seek redress by means which may include the vehicle. It's difficult to gauge exactly what the Credit Union (CU) would do because they make the decisions. No one can guess what the committee or their legal/collections department would do because each and every CU has different rules and guidelines.

Even if someone were at your same CU, the outcome could be different.

The collateralization is the first thing. The second is that they may just send you to collections and then sue you.I hope that you have no deposit accounts at that credit union as I would never bank where I have credit products, especially at a CU.

You may be able to work out something with them -- which is going to mean paying them back, in fall, with all the accumulated interest plus additional interest. You should reach back out to the CU's bankruptcy department or the person that did not return your call.

Let us know what they say or propose.